Before you list your home for sale, there are things you can do to get ready.
Have your documents ready:
Real Property Report: In Alberta, unless the buyer agrees otherwise, the seller must provide a Real Property Report (RPR) with evidence of municipal compliance to the buyer prior to the deal closing. An RPR is a legal document prepared by an Alberta Land Surveyor that shows property boundaries and improvements (structures) relative to the property’s boundaries. Evidence of municipal compliance confirms that property improvements comply with the municipality’s Bylaws and Regulations. It does not mean the building’s use complies with their Land Use Bylaws, easements, covenants, legislation, or other requirements affecting land or buildings. Contact an Alberta Land Surveyor if you need to update your RPR or obtain a new one.
Condominium Documents: Condominium documents relate to the operation of the condominium corporation. Buyers want to ensure the condominium corporation is financially stable, managed well, and properly maintained. Condominium documents include but are not limited to:
If you don’t have the required documents, contact your condominium management company or contact someone on the condominium corporation’s Board of Directors.
Get a sense of market conditions: Market conditions affect home prices and dictate who has a stronger negotiating position.
buyer’s market – where property supply is strong and buyer demand is weak. In a buyer’s market, you’re more likely to hear buyers think they received a good deal.
seller’s market – where buyer demand is strong and property supply is weak. A buyer in a seller’s market may worry they’re paying too much for a property because they’re competing with other buyers for a limited supply of properties.
balanced market – where demand from buyers is keeping pace with the supply of properties for sale.
Tenant’s rights: Do you have renters living in the property? If so, familiarize yourself with their rights as tenants. Additionally, think about the terms of your tenant’s lease. If it’s a fixed-term, and you plan to sell the property before the end of the term, you need to provide your tenants with three months’ notice. Review the Residential Tenancies Act or contact Service Alberta if you have questions.
Current Mortgage: If you currently have a mortgage on your property, review the terms. You can bring a portable mortgage to another property, including the rate. An assumable mortgage allows a buyer to take over your existing mortgage including the rate and term. If it’s an assumable mortgage, your lender will likely require the buyer to qualify under the terms and conditions of the existing mortgage before allowing them to assume the mortgage.
If you’re not porting the mortgage to a new property, and your current mortgage term isn’t finished, there will be a mortgage payout penalty. Payout penalties can be substantial. If you pay out your mortgage before finishing the term, ensure you have enough money to cover the payout penalty.
Tax implications: If your property isn’t your primary residence as defined by the Canada Revenue Agency, there could be significant tax implications. Your best bet is to speak with a tax professional or an accountant to find out what effect the sale will have on your tax situation. Additionally, beginning in the 2016 tax year, Canadians have to report the sale of their principal residence on their income taxes.
Current contracts: Determine if you have any current contracts for home-related services, for example a home alarm system or rented hot water heater. For each contract, you need to think about the effect the contract will have on potential buyers. Can they assume your contract? Is the contract transferable in the event you buy and move to a new place? At the very least, you need to disclose to buyers the existence of and details for each contract.